10 Apr’15
5 ways the 'Internet of Things' transformed the vending machine

5 ways the ‘Internet of Things’ transformed the vending machine

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The ability to access information generated by connected devices, remotely and in real-time, can enable a fundamental shift in how companies operate and how they generate revenues. By being constantly connected, companies can offer their customers a “product utility as a service,” shifting the value from the actual product to the service this product provides.

Smart vending machines are a great example of the impact of the “Internet of Things” (IoT) on revenue streams and business models.

With improved security, user customization, smart payments and constant monitoring of inventory and consumption patterns, opportunities abound for dispensing new products more profitably using a network of connected devices.

Significant shift

Almost 100 years after vending machines were first deployed, traditional vending machines have evolved with technology to include more digital capabilities, turning them from “dumb terminals” into smart, connected devices. Coke has secured 16 million IP addresses in 2010, which are used for installations such as Freestyle, its new breed of smart vending machines.

Supplying the machines with network connectivity allows Coke to identify each individual machine, track inventory stock levels, conduct real time test marketing, and probably most importantly: track trends and drinking preference and adjust the selections accordingly. More than 2,000 Freestyle machines are currently deployed in fast food locations throughout the U.S. and the U.K.

Tech giants SAP and Intel are each developing a range of platforms and solutions for wired and wireless machines. SAP’s Smart Vending solution (based on the SAP HANA real-time data platform) provides brands the opportunity to engage with their customers through access to real-time management dashboards and visualization tools, displaying timely sales and maintenance information across the entire network and at each individual point of sale.

Intel’s new reference design for intelligent vending provides an easy way to retrofit traditional vending machines into Internet-connected machines. Brands and machine operators can take advantage of new business opportunities, cloud services, and data analytics through a suite of related products and applications.

Here are five examples of how connected machines can enhance economic returns with increased revenues, improved profitability and a better user experience:

1. Digital content delivery

Intelligent software solutions enable the delivery of digital content to every screen of a vending system, with greater impact. Vending machines can act as billboards, providing custom content, such as promotions, videos, games and TV commercials on a unit’s touch screen.

By placing these machines at high-traffic sites, like stadiums and theaters, vendors are able to create an immediate connection with consumers. This helps brands reach unique audiences in a timely manner and allows the brand to remotely manage messages in real time and launch customized content dynamically. This also helps generate new sources of content and advertising revenues that could be distributed between the machine operators, the venues or any entity that controls the facility where the machines are stationed.

2. Smart payments

Users can pay for items using near field communication (NFC) payments, a credit/debit card or other mobile wallet apps. Coke has developed its own cashless gateway to lower transaction costs and increase control over payments. Consumers can also use mobile wallet payment systems such as Google Wallet, a downloadable mobile app, to tap smartphones against vending machines readers to make purchases with one swipe. This provides new sources of revenues for the payment platforms as well as provides better user experience, which in turn can increase usage and customer loyalty.

3. Social commerce

Smart vending solutions provide brands the opportunity to engage with their customers in highly personalized ways. Consumers can use smartphones to identify themselves, build profiles, connect to their social networks, play social games and receive promotions and tailored ads. Social interaction via gifting allows users to send gifts to their friends.

Gifting occurs when users enter their social media accounts for recognition and choose a recipient, which allows for the vending machine to send a notification message to the friend, along with a code that allows the recipient to pick up the gift at a participating vending machine. Vending machines can also utilize gamification to get people to check in and interact, increasing overall user engagement. For example, Coke is affixing QR codes to its vending machine to motivate consumers to create avatars, check in to machines on a regular basis and receive rewards such as avatar virtual gifts.

4. Inventory management

Machines using sensor data and built-in intelligence can make the right inventory decisions. Connected platforms allow manufacturers and distributors to track shipments to distribution centers and to vending machines, as well as collect consumer data from machines to monitor usage for accurate consumable resupply, track sales trends by geography and time of year, and remotely troubleshoot system issues. Software combines the service and stock alerts with sales data so companies can dispatch their service people to the most profitable machines first.

The system also makes smart inventory decisions based on the data it has collected from the vending machine and all of the others owned by this company, as well as data from outside sources. For instance, just because it’s low on ice cream doesn’t mean the system will place orders for more ice cream — not if the weather is supposed to be cold for the next several days. It also takes into consideration other factors, such as popularity, when setting inventory levels, so the right amount of each snack is delivered to the truck for delivery each day.

5. Maintenance and energy savings

Device management applications allow vendors to remotely identify, diagnose, and repair machines. Coca-Cola unveiled an ultra-energy-saving vending machine in Japan that cools beverages down at night yet keeps them cool in daytime with airtight doors and vacuum-insulated material. Peak time energy conservation allows vendors to control and shift power used to cool beverages from day to night. This makes it possible for the machines to offer cold products without using any power, cutting daytime power consumption. Such platforms present endless opportunities for the vending industry to maximize productivity and profitability.


Companies are gradually beginning to realize the continuously evolving relationship between products and services. In their Digital Universe Study, EMC and IDC see the IoT creating opportunities for higher revenue streams, improved processes and operational efficiency, higher market performance and increased customer loyalty.

One important aspect of that is the diversification of existing revenue streams by creating new services and new revenue sources on top of traditional products. The IoT will also make it easier for enterprises to implement end-to-end supply chain management, across functions and geographies, thus operating more profitably and efficiently.

Intelligent operations by accessing information from autonomous end points will allow organizations to make dynamic, real-time decisions about pricing, logistics, sales and support.

5 ways the ‘Internet of Things’ transformed the vending machine @bizjournals

Note: This is an excerpt from the Foresight white paper: “The Internet of Things (IoT): Moving Towards a Connected World.” The full paper is available for download on this link.

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